Minimum Wage Myths that Keep Our Teens Out of Work

July 24, 2012

Recently, both the Economic Policy Institute and President Obama have supported a higher minimum wage while simultaneously lamenting the current lack of employment opportunities for young adults. The evidence suggests that accomplishing that second goal means giving up on the first, says Pamela Villarreal, a senior fellow with the National Center for Policy Analysis.

According to the Bureau of Labor Statistics, minimum wage workers are more likely to be teenagers, college students or secondary earners, rather than heads-of-households supporting families. About half are younger than age 25. It's this inexperienced group most affected by changes in the minimum wage whose employment has declined in recent years.

In July 2007, the unemployment rate for 16- to 19-year-old workers was 15.3 percent; three years later, following a 41 percent increase in the federal minimum wage, the rate was 25.9 percent.

In some urban areas, the unemployment rate for teenagers is exceptionally high.

For instance, the teenage unemployment rate in Washington, D.C., last summer was 50 percent, the highest in the nation.

The recession has played a role in this teen employment crisis, but a wide body of economic research suggests minimum wages are also to blame. In their 2008 book Minimum Wages, economists David Neumark and William Wascher reviewed evidence on both sides of the minimum wage debate, and concluded that the "preponderance of evidence" pointed to job losses for young employees following a minimum wage increase.

Summer jobs are crucial for providing youth some real-world work experience, and minimum wage increases put them further out of reach. Reforming the education system and promoting characteristics that increase individual wages -- such as finishing high school and improving skills through college or trade/vocational schools -- would also do more to lift wages and the economy than an additional government wage mandate.